Telecom Stocks Outlook for the week - 28.08.2017 to 01.09.2017

Telecom Stocks Outlook for the week - 28.08.2017 to 01.09.2017

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Telecom Stocks Outlook for the week - 28.08.2017 to 01.09.2017 )

The shares of most telecommunications companies next week will be impacted by Reliance Jio's announcement on the bookings received for its "effectively free" fourth generation mobile phone. The company had announced pre-bookings yesterday for the phone that comes for a refundable deposit of 1,500 rupees. If (Reliance Jio's booking) numbers are good, there will be some impact on stocks, especially on Idea Cellular. The company had said in July it aims to make available 5 mln handsets every week after pre-booking opens. With Reliance Jio's feature phone broadening its addressable market, competitive intensity may likely lead to weaker revenue and profitability for Bharti Airtel.
ICRA continues to hold a negative outlook for the sector, which will keep facing headwinds due to competition and the industry revenue is expected to come down to 2.4 trln rupees for 2017-18 (Apr-Mar), it had said in a recent note. The inter-ministerial panel set up by the government to suggest steps to resolve financial stress in the sector is expected to submit its report to the government next week. Shares could also take a cue from the recommendations of the panel. Among various relief measures sought by telecom operators, the panel is in favour of extending the time period given to operators to make spectrum payments over 16 years as against 10 years at present. The panel may also recommend shifting to marginal cost of lending rate from prime lending rate to calculate future interest payments and penalties payable by operators to the department of telecommunications.

Source : Cogencis Information Services Ltd.